Most of us couldn't help but notice thenews this week that Apple had just completed it's one billionth download,
certainly a milestone in the digital music industry. But what about the other company that just celebrated the
same? Perhaps you weren't aware that TouchTunes, a maker of digital
jukeboxes since 1998, has also downloaded over 1 billion tracks, and they did it with just 16 thousand jukeboxes, as
comapred to Apple's customer base of 42 million. Like iTunes, TouchTunes is a dominant player in it's chosen niche, and
is said to have an estimated 75 per cent share of the digital jukebox market. Learn something new every day, dontchya?
Tower Records Up For Sale
More fodder for the cannon as Tower
Records, just fresh out of bankruptcy, has hired the Los Angeles investment banking firm of Houlihan Lokey Howard
& Zukin to market the company, according to a report in Billboard magazine. It's been clear for a while
now that the big brick and mortars were going to be the first casualties of the new digital terrain and this
is just another brick coming down from the wall. The market research firm Nielsen SoundScan said CD sales dropped 7
percent last year and have fallen 21 percent since 2000. Musicland was the latest big retailer to file for bankruptcy
and has just been taken over by Trans World Entertainment, which owns the FYE chain. Holiday sales at Tower were down
about 12.5 percent this year, and Tower's bondholders finally pulled the trigger for finding a way out. Anybody in the
market for a buggy whip store?
Amazon Has Nothing To Say... Yet.
Rumours are flying high that Amazon is planning on opening a digital music store, but for now they have refused to
confirm or deny. So I think we can take that as a confirm. There has been a lot of speculation that music executives
are keen to make a deal so that somebody can put up a legitimate fight aginst the iTunes monopoly
domination of the marketplace. Most analysts seem to think it would be a good idea for amazon, as they do have 55
million active customer accounts to play with, and music downlaods offer a substantially improved margin over retail.
Look for an Amazon music store at an internet connection enar you this summer.
Big Trouble In Satellite Radio
XM Radio had a big shakeup announced in their SEC filings yesterday as Pierce Roberts Jr, a director with the company,
announced he was leaving the company due to a disagreement with the
board over strategic direction. In and of itself this wouldn't be a newsmaker, but it became public that Roberts felt a
crisis was looming: “Given current course and speed there is, in my view, a significant chance of a crisis on the
horizon,” Roberts wrote. “Even absent a crisis, I believe that XM will inevitably serve its shareholders
poorly without major changes now.”. Shares fell, analysts analyzed, and the question on everyone's lips is
whether satellite radio can generate enough revenue to sustain it's growth. XM CEO Hugh Panero doesn't seem worried: he
expects XM to reach profitability from its operations by the end of this year, with subscription revenues reaching $860
million. He also said he expects to have 9 million subscribers by the end of the year. Okay then.
Sony Making Moves With The PS3 Towards DVR?
The latest buzz to hit the fibes is that Sony is
gearing their PS3 to be an all in one media device. Following the apparent success of the X-Box 360, they are
looking to make their PS3 an all around media champ, and in particular are looking for it to be the anchor to the PSP,
in much the same way that the computer is the anchor to your iPod. So this means downloading MP3's, video, and lord
knows what else to your PS3, and then streaming it out to the media device of your choice, preferrably the PSP. Sony,
being the massive media/electronics conglomerate that it is, would like to find it's own success at distributing
it's content, and would really rather not have to do it through the iPod if it can help it. I can see a lot of things
that could go wrong with this strategy, but this is Sony we are talking about and they got a lot of room to maneuver,
so I'm going to pipe down on this one and see what they actually do.
Ipsos Poll: It's The Music That Sucks
A new poll done by Ipsos Public Affairs
shows that music fans in general have a much different perspective about declining record sales, then the
labels, which to date have primarily blamed file sharing services. In the poll 74% of music fans (made
up primarily of rock and country fans) stated that they felt CD prices were too expensive, and a whopping 58%
felt that music itself was just plain bad lately. Throwing salt on the wound 92% said they had never downloaded a song
illegally, and 80% thought that doing so was wrong. This is in line with a theory I have that it's not just consumers
who have been swayed by the blizzard of choices in entertainment now offered to the masses. The musicians too are
being affected, and with the constant distractions of movies, shows, internet, games, and shopping malls, it's a wonder
they find any time to practice at all. Is music getting worse? I don't know, but it's hard to make the case that it's
getting better. Antony & The Johnsons are excepted from this of
course.
It Was Bound To Happen: Swiss Army Knife MP3 Player
Of course the one gadget that has everything was sooner or later going to acquire the one gadget everybody has, and now
word has come that our dreams have come true: Victorinox has announced a
Swiss Army knife featuring an MP3 player and USB storage device with up to 4GB memory. The device is
surprisingly full featured: not only can you use it to threaten the local thugs, but it has true drag and drop
functionality, requiring no special software to plug and play into your computer. It also has the ability to record FM
radio, which is useful when you need to perfom a life saving boy scout emergency. Or not. Anyways, I wouldn't mind
having one.
Digital Music Group IPO On The Rebound
As we mentioned yesterday, Digital Music Group got off to a nasty start with it's IPO, losing nearly 5% on the first day
of trading. Today they were able to inch it back upwards a
bit, closing at $9.64 which is just under the opening price of $9.75, and might certainly be generating some sighs
of relief in the DMG's office hallways. Of course, they still have a way to go, if the comment
in our previous story is true about the stock options presented to employees. Your crack investigative
team person is on the case, and will have more on that for you shortly.
Google Denies Napster Rumours
Google is denying having any talk with Napster. "Fabrication" according to
their spokesperson, which if you ask me, makes a whole lot more sense then purchasing a worn out brand that is flopping
like a dead fish. Not that I have it in for Napster or anything, just calling a spade a spade: they are spending a
pretty penny on a marketing campaign, and I'm hazarding a guess that customer accquisition costs well exceed what your
average customer will spend in a year, maybe two. Napster of course is staying mum on the whole thing. I suspect
that they are wishing Google would do the same thing.Digital Music Shares Don't Do So Well In Market Debut
Digital Music Group, a rather uniquely named aggregator, saw
it's shares decline 14.3 percent in it's market debut on NASDAQ. The Sacramento, California-based company acquires
the rights to out-of-print recordings -- including tracks by Fats Domino and Herman's Hermits -- digitizes them and
sells them online through music Web sites, including the iTunes store of Apple Computer Inc. shares were trading at
$8.89, which is actually up from the low they saw at $8.36. It wasn't the $9.75 a share they were looking for, but the
company is still valued at $34 million at this writing, which isn't too shabby given the size of the company, and how
long it's been around.
CBS Votes iTunes Off The Island
CBS has become the first major network to go their own way by announcing that
they plan to offer downloadable Survivor episodes on their own website, as opposed to the iTunes store. They are
still hedging their bets however by not ruling out a future deal with Apple, but for now they will offer episodes that
are good for 24 hours after purchase for $1.99. Other pricing schemes are in the works, and they are doing it
simultaneously with the Google video service, so it should be pretty easy for them to figure out which service has the
most traction (I'm going to take a wild guess here and say that the CBS site is going to do a lot more business then
the Google one, but I think it's a much closer call with CBS vs. iTunes...)
Napster Not So Dead After All
Some guys get all the luck. Put your coffee down because the hot new
rumour to hit the wires is that Google is considering acquiring
Napster. I don't pretend to understand this: if Google wants to get in this subscription music game there seems to
be juicier fruit out there (like RealNetworks - subtract the market cap of course). But I'm sure there's a gaggle of
google Phd's who could argue me under the table on that one.MTV Networks Announces Deal With iTunes
Hot off the heals of announcing their digital media service, Urge, MTV Networks gave a taste of how much
confidence they have in that service by announcing a deal with their competitor, iTunes, to
distribute MTV, MTV2, Nickolodeon and Comedy Central shows through iTunes. This means Spongebob, South Park, Dora
The Explorer, Real World, and a whole lot of other stuff is now going to be coming down the pipe to a video iPod near
you. So load 'em if you got 'em.
Apple Locking Up Universities With iPods
Is it just me or is Steve Jobs following pretty much the same path with the iPod that he
followed with the Apple II way back in the 80's? Today brings news that Apple
is offering college lectures via podcasts through several universities. Basically the deal is they provide the
service and software for free to the universities, and in turn Apple gets even more branding and dominance with the
youth market. Which follows the model that Jobs has employed pretty much since the Apple II, when you could find an
Apple II in just about every suburban school that had a computer lab. And with Microsoft threatening to release it's
own MP3 player, the stage is set for a rematch, only this time I think the smart money is on Apple.Nettwerk Vs. RIAA
Canda's biggest independent label, Nettwerk, announced yesterday that they are joining the fight
against the RIAA. They are intervening in a suit the RIAA has filed against a family for illegally downloading music
tracks. The privately-owned Nettwerk Music Group is intervening, it says, because the songs downloaded by the Gruebel
family include Avril Lavigne, a Nettwerk management client. Nettwerk will fund the Gruebel's defense. The current
actions of the RIAA are not in my artists' best interests," said Nettwerk chief executive Terry McBride in a
statement. "Litigation is not 'artist development'. Litigation is a deterrent to creativity and passion and it is
hurting the business I love." The RIAA has demanded the family pay a $9,000 penalty, reduced to $4,500 if they pay
up promptly. Nettwerk has vowed to foot the legal bill if it loses the case.
